The Accidental Russophile

And so it begins:

President Vladimir Putin met with Prosecutor General Yury Chaika on Wednesday. Putin said he had signed a decree on preparations for the winter Olympic Games in Sochi, which “attaches serious importance to security matters.” Putin also asked Chaika “to look at this issue in a wider context, not only from the point of view of personal security.”

“The matter must also be looked at from the point of view of economic security. Control – sufficiently rigorous control – must be organized over the rational spending of the funds,” Putin said.

You can expect to hear much talk over the coming years regarding the budget and money spent on the Sochi Olympics. Olympics are notorious for cost overages. The 2010 Olympics in Vancouver, Canada had a (so far) final budget of $1.7 billion Canadian, of which about $550 million were for sports facilities. That represents a cost increase of 23% from original estimates.

The news is even worse for the 2012 London Olympics, where costs have climbed from an initial estimate of £2.4 billion to £9.3 billion … and counting!

The 2004 Athen’s Olympics had an original budget of 1.14 billion euro, which climbed to 3 billion euro before construction began. The budget was twice raised, from 6 billion euro and finally to a total of nearly 8.6 billion euro.

The current projected budgets for the Sochi Olympics is approximately $12 billion, comprised of a current 60/40 split of public and private funding. This will make it, by far, the most expensive Winter Olympics ever. It isn’t out of the realm of possibility that costs over-runs could easily see the final bill climb past the $20 billion dollar cost of the Beijing 2008 Summer Olympics.

One can hope that Russia might see the trend, and be prepared for the climbing costs. As VVP is rightly pointing out, only days after winning the 2012 games … hold onto your wallets, Russia! The final bill for hosting an Olympic games is far from certain.